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Question Paper

Management Control and Information Systems - I (MB2F3): January 2009
 Answer all 88 questions.
 Marks are indicated against each question.
Total Marks : 100
1. Which of the following would be the ‘Critical Success Factors’ (CSF’s) for consumer electronic <Answer>

industry such as ‘Whirlpool’?
I. Store location.
II. Sustainable customer relationships with distributors.
III. Sustainable supplier relationship.
IV. Cutting edge research and development.
(a) Both (I) and (III) above
(b) Both (II) and (IV) above
(c) Both (III) and (IV) above
(d) (I), (II) and (III) above
(e) (II), (III) and (IV) above. (1 mark)
2. Structural dimensions are the dimensions that are entirely internal to the organizations. The structural <Answer>

dimensions are shaped based on which of the following types of dimensions?
(a) Contextual dimensions
(b) Formal dimensions
(c) Informal dimensions
(d) Cultural dimensions
(e) Functional dimensions. (1 mark)
3. Tata Group implemented the ‘Tata Business Excellence Model (TBEM)’ to bring about a <Answer>

transformation in the organization to enable it to face the dynamic and competitive business
environment. TBEM include(s) core value(s) like
I. Organizational agility.
II. Valuing employees and partners.
III. Company-driven excellence.
IV. Visionary leadership.
(a) Only (I) above
(b) Only (III) above
(c) Both (I) and (III) above
(d) Both (II) and (IV) above
(e) (I), (II) and (IV) above. (1 mark)
4. Which of the following transactions results in decrease of working capital? <Answer>

(a) Issue of shares for cash
(b) Take over of long-term investments by creditors
(c) Stock sold at 20% below cost for cash
(d) Machinery purchased in exchange of debentures
(e) Preliminary expenses written-off. (2marks)
5. A budget for discretionary expenditure such as training, advertising, sales promotion and research and <Answer>

development etc., is an example of which of the following types of budget?
(a) Master budget
(b) Flexible budget
(c) Capital budget
(d) Appropriation budget
(e) Participative budget. (1 mark)

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6. Who among the following decides whether the financial statements audited are depicting the true and <Answer>

fair picture of the organization’s state of affairs?
(a) Director of the company
(b) Auditor of the company
(c) Chief executive officer of the company
(d) President of the company
(e) Government. (1 mark)
7. Mandira Ltd., has furnished the following budget for the next year: <Answer>

Quarters 1st 2nd 3rd 4th
Budgeted direct labor hours 69,000 74,000 71,000 76,000
Variable overhead rate per labor hour Rs. 6.20 Rs. 6.20 Rs. 6.20 Rs. 6.20
Fixed manufacturing overhead costs Rs.82,000 Rs.82,000 Rs.82,000 Rs.82,000
The fixed manufacturing overhead costs include depreciation of Rs.42,000 per quarter. 75% of the
manufacturing overhead costs of each quarter are paid in cash during that quarter and the remaining
25% is paid in the following quarter. The amount of overhead costs to be paid during the 2nd quarter is
(a) Rs.4,75,550
(b) Rs.4,91,050
(c) Rs.5,09,800
(d) Rs.5,40,800
(e) Rs.5,33,050. (2marks)
8. Which of the following is more convenient for Reliance telecom, if it wants to compare its market share <Answer>

with that of its competitors?
(a) Table
(b) Pie chart
(c) Bar chart
(d) Line chart
(e) Dot chart. (1 mark)
9. An individual’s value system is an important factor that determines whether he/she will behave <Answer>

ethically or unethically, when faced with an ethical dilemma. Which of the following is/are true about
locus of control, one of the individual factors that influence ethical behavior?
I. Is the ability of the individual to take decisions independently in the face of problems.
II. Relates to the reasons which a person cites for his/her success or failure.
III. People with high locus of control will not depend on others for decision-making whereas people
with low locus of control will look to other people for help in arriving at decisions.
IV. Managers with an external locus of control feel they are in control of the situation and are ready to
be held accountable for their actions.
(a) Only (II) above
(b) Both (I) and (III) above
(c) Both (II) and (IV) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above. (1 mark)

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10.Key performance indicators have an impact on all the key results areas of the organizations. Which of <Answer>

the following is/are the characteristic(s) of the key performance indicators?
I. Key performance indicators are generally financial in nature and cannot be measured whenever
required.
II. They should be devised in such a way that employees at all levels in the organization understand
and utilize them effectively.
III. Key performance indicators have a major effect on most of the critical success factors but they
have a negative impact on most of the performance indicators.
IV. Both the teams and the individuals in an organization are held responsible for the key performance
indicators.
(a) Only (II) above
(b) Both (I) and (III) above
(c) Both (II) and (IV) above
(d) Both (III) and (IV) above
(e) (I), (II) and (III) above. (1 mark)
11.Which of the following organizational structure is also termed as Product structure? <Answer>

(a) Functional structure
(b) Horizontal structure
(c) Matrix structure
(d) Divisional structure
(e) Hybrid structure. (1 mark)
12.Which of the following constitute the foundation of the cybernetic process of management control? <Answer>

(a) Principles
(b) Actuals
(c) Standards
(d) Controls
(e) Objectives. (1 mark)
13.The calculation of which of the following heads are included in the preparation of direct material <Answer>

budget?
I. Quantity of material needed for production.
II. Quantity of material to be purchased.
III. Availability of raw material.
IV. Cost of material used.
(a) Both (I) and (II) above
(b) Both (I) and (III) above
(c) Both (III) and (IV) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above. (1 mark)
14.Which of the following is/are true about Compliance management audit? <Answer>

I. Auditors are asked to identify the gaps between the organization’s existing policies and objectives
and its actual practices.
II. Agribusiness firms engaged in food processing may regularly schedule audits of their quality
control function is an example of compliance management audit.
III. An organization conducts compliance management audit to find ways to optimize the usage of
energy in an organization.
IV. This type of audit eliminates the fear of directives being imposed on the organization by an
outside party.
(a) Only (III) above
(b) Both (I) and (IV) above
(c) Both (II) and (III) above
(d) (I), (III) and (IV) above
(e) (II), (III) and (IV) above. (1 mark)

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Accepting relatively poor quality. if the cost of materials is recorded wrongly <Answer> or it is recorded higher or lower than the correct or budgeted value? (a) Operational causes (b) Controllable causes (c) Uncontrollable causes (d) Situational causes (e) Non-operational causes.Management controls are classified based on different schemes. Using which of the <Answer> following techniques. Providing for greater lead times.Strategic decision-making may involve a lot of uncertain and fuzzy variables. III. Bad quality can lead to <Answer> managers budgeting for slack in their operations. (1 mark) 16. (1 mark) 18.15.Which of the following is an example of the cost center in which a certain fixed budget is allocated to <Answer> the cost center and it is expected to achieve the best possible results within the allocated budget? (a) Maintenance department (b) A company-owned sales outlet (c) Information technology department (d) Finance department (e) Public relation department. (1 mark) 19. some important information should <Answer> be disclosed in the annual report.Which of the following lead to a cost variance for materials. Which of the following is considered to be ‘Essential’ information item in an annual report? (a) Capitalized interest (b) Major contractual relationships (c) Information regarding assets (d) Discussion on major factors influencing next year (e) Capital expenditure. (1 mark) 17. in terms of I. (1 mark) Page 4 of 30 . II. Which of the following is a <Answer> classification based on time of implementation of controls? (a) Closed loop controls (b) Personnel/cultural controls (c) Formal controls (d) Action accountability (e) Pre-action appraisals. Decision support systems help in controlling the inherent risk in decision-making in such scenario? (a) Where-if analysis (b) How-if analysis (c) What-if analysis (d) Who-if analysis (e) When-if analysis.Productivity and quality are the important aspects in operations management.In order to have a clear idea of an organization’s financial health. (1 mark) 20. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (I) and (II) above (e) Both (II) and (III) above. Efficient utilization of resources.

10.000 24.400 (Favorable) (d) Rs.. II.12. Master budgets serve only as planning tool and do not serve as control tool. (1 mark) 25. (III) and (IV) above. has furnished the following information pertaining to its product A for the month of <Answer> December 2008: Particulars Actual Budget Sales (units) 20. Their emphasis on financial data and/or non-financial data.In certain organizations.Arogya Ltd. III.12. monitors the organization’s financial activities <Answer> and maintains documentary evidence of all inflows and outflows? (a) Financial policies (b) Book-keeping (c) Financial procedures (d) Financial information system (e) Controlling assets. The audit categories differ in terms of <Answer> I. (1 mark) Page 5 of 30 . (III) and (IV) above (d) (II). II. (III) and (IV) above.Which of the following are the benefits of master budgets? <Answer> I.Which of the following components of financial control. certification. III. (II). Compliance.800 2.000 The sales price variance for the month was (a) Rs.There are many categories of audits that organizations undertake.21.52. the transfer pricing department only draws up the transfer pricing policies. (1 mark) 22. IV. (1 mark) 23. Scope. when achieved. IV. contribute to the objectives of the organization. (a) Both (I) and (III) above (b) Both (II) and (IV) above (c) (I).10. the <Answer> implementation and day-to-day management are taken care of by the (a) Human resource department (b) Marketing department (c) Operations department (d) Finance and tax departments (e) Legal department. The planning activity in master budgets helps organizations to look for alternative ways in which they can enhance value to customers and also minimize costs. (1 mark) 24. As the master budget is a compilation of the budgets from different departments.20. (a) Both (I) and (II) above (b) Both (II) and (III) above (c) (I). it helps in better integration of all the organizational functions.800 (Adverse) (b) Rs. (III) and (IV) above (e) All (I). (II).) 2. (III) and (IV) above (e) All (I). (II) and (III) above (d) (I).960 (Adverse) (e) Rs. A master budget helps the employees track how each of their business unit objectives. communication and/or control.000 Sales revenue (Rs.12. Secondary purpose.960 (Favorable).800 (Favorable) (c) Rs.

(1 mark) 27. (1 mark) 28. (II). (1 mark) Page 6 of 30 . (III) and (IV) above.? (a) Individualism (b) Masculinity (c) Collectivism (d) Power distance (e) Femininity. III. Budgeting helps managers to enhance their learning skills. assertiveness etc. in India is same as the current market price – as if the transaction is taking place between two unrelated organizations. The budgeting process starts with the dissemination of guidelines approved by the senior management. then the method of estimating transfer pricing is known as (a) Comparable uncontrolled price method (b) Profit sharing method (c) Two sets of prices method (d) Two-step pricing method (e) Cost plus method. there is a poor flow of know-how between the parent organization and the subsidiary (e) In this strategy. there is a two-way flow of know-how between the parent organization and subsidiary (b) In this strategy.Budgets are used to give an overview of the organization and its operations.Which of the following is true about multi-domestic strategy. there is no flow of know-how between the parent organization and the subsidiary. the performance parameter is <Answer> expected to exhibit a linear pattern throughout the period during which the performance is analyzed? (a) Step (b) Seasonal (c) Growth curve (d) Flat line (e) Vertical.26. in India sells wool to its subsidiary organization Diakiba Ltd. independent thinking.. If the rate charged <Answer> by Dustin Ltd. (a) Both (I) and (III) above (b) Both (II) and (IV) above (c) Both (III) and (IV) above (d) (I).Geert Hofstede has defined culture and highlighted the dimensions on which culture varies across the <Answer> countries. there is a one-way flow of know-how from the parent organization to the subsidiary (c) In this strategy. (1 mark) 29. one of the strategies for doing <Answer> international business? (a) In this strategy.. Budgets can be used to evaluate the performance of the operations of the organization as well as the performance of the employees against set standards.. Which of the following dimensions of culture implies competitive spirit. Budgets help in integrating the tactical and operational strategies of different departments with the corporate strategy of the organization. Which of the following are <Answer> true about budgets? I. (II) and (III) above (e) All (I).Dustin Ltd. IV.In which of the following types of target in period-to-period reporting. II. in China. (1 mark) 30. there is a transfer of know-how and/or products developed in the home country to foreign markets where they are scarce or unavailable (d) In this strategy.

An analysis of the cash flows from operating activities will indicate the quantum of cash being generated from business operations. (II) and (III) above.31.55 per unit The sales volume variance for the month was (a) Rs. has furnished the following budgeted and actual sales for the month of December 2008: <Answer> Particulars Budget Actual Units sold 4. (1 mark) 34..000 (Adverse) (e) Rs.400 (Favorable) (c) Rs.An organization prepares a variety of financial statements to monitor business performance.Which of the following budgets help organizations to control inaccuracies regarding projections and in <Answer> turn minimize the discrepancies between the standards and the actuals? (a) Rolling (b) Participative (c) Master (d) Financial (e) Zero-based. Cash flow from investing activities helps to estimate future cash outflow requirements in terms of payments to shareholders and lenders. (1 mark) Page 7 of 30 . Cash flow <Answer> statement is one of the financial statements which are extensively used for exercising financial control.400 (Adverse) (b) Rs. II.000 (Adverse) (d) Rs.000 (Favorable).13. III. Which of the following is true about audit evidence? (a) Audit evidence is not influenced by the legal and statutory requirements (b) Audit evidence depends on the size of the item or error judged in the particular circumstances of its omission or misstatement (c) Judgment regarding audit evidence constitutes an evaluation of only quantity of misstatement in the financial statements (d) Audit evidence comprises of basic accounting data only (e) For the audit evidence to be useful it has to fulfill criteria like sufficiency and appropriateness. (a) Only (II) above (b) Only (III) above (c) Both (I) and (II) above (d) Both (II) and (III) above (e) All (I). (1 mark) 32. (1 mark) 35.Damu Ltd.60 per unit Rs.500 units Sales margin Rs. Which of the following is/are true about cash flow statement? I.13.13. (2marks) 33.900 units 4.Which of the following controls is used when the objectives are clear and results are quantifiable.24. but <Answer> the interfaces are not predictable and activities not repetitive? (a) Intuitive (b) Political (c) Judgmental (d) Routine (e) Expert. Cash flow statement is based on the accrual accounting principle.Audit evidence is any kind of information that the auditor uses to determine whether the financial <Answer> statements being audited are in accordance with the established rules and regulations.24.

00.. but in order to ensure that the company will not run out of stock. if the audit risk is lower or higher than the maximum acceptable limit.Apex Ltd. takes decisions all alone about the various <Answer> operational aspects of the division and also decides the roles and responsibilities and the way work should be carried out by the subordinates.28.5 kg of plastic that costs Rs. where the inherent risk is 50 percent.000 kg. Each bag uses 0. then the auditor should take necessary steps to (a) Increase the probability of detecting the misstatement and decrease the detection risk (b) Decrease the probability of detecting the misstatement and increase the detection risk (c) Increase the probability of detecting the misstatement and decrease the inherent risk (d) Decrease the probability of detecting the misstatement and decrease the detection risk (e) Increase the probability of detecting the misstatement and decrease the control risk.09.Mr..12 per kg.36. In above situation.76. 2009 is estimated as 60. manager of bearing division of Levi Ltd. (1 mark) 37. The company has some problems recently in supplying its customers promptly and the directors have decided to aim for a 10% increase in finished goods closing stock at the end of each of the three months.200 (e) Rs.000 units April 2009 4.000 units March 2009 4.26.420 (c) Rs. 2009 is estimated as 50.An interest coverage ratio of 6 indicates that <Answer> (a) Sales are 6 times of interest expense (b) Profit after tax is 6 times of interest expense (c) Profit before tax is equal to 1/6th of interest expense (d) Profit before interest and taxes is 6 times of interest expense (e) Profit after tax is equal to 1/6th of interest expense. Which of the following <Answer> is not the factor which can be controlled by the organization? (a) Service orientation (b) Government rules and regulations (c) Employees (d) Leadership (e) Administration.180 (b) Rs. the directors would like to increase the closing stock of plastic by 10% each month for the next three months. The stock of plastic on February 01. is undergoing an audit. Alok Nath. (2marks) 41.290 (d) Rs. (2marks) 40.60.900.83. Alok Nath can be categorized as (a) Democratic manager (b) Autocratic directive manager (c) Autocratic permissive manager (d) Democratic permissive manager (e) Democratic directive manager. detection risk is <Answer> 82 percent and the control risk is 48 percent and the maximum audit risk the auditor wishes to accept is 18 percent.27.The success or failure of a business organization depends on number of factors.12.26.60.28. The company’s directors have projected the following sales for <Answer> the next three months: February 2009 4.Which of the following types of costs are used in the cost-based pricing methods? <Answer> (a) Actual (b) Variable (c) Historical (d) Fixed (e) Standard. (1 mark) 39. manufactures plastic bags. The raw material is readily available.20.Ambuli Ltd. The cost of raw material to be purchased during the month of April 2009 will be (a) Rs. (2marks) Page 8 of 30 .000 units.000 units Opening stock of finished goods on February 01. Mr. (1 mark) 38..

10. (1 mark) 43.10.000 respectively (d) 10.600 February 2009 9. Shareholders of the firm suspect that the top management is projecting an inflated picture of the profits and underestimating the value of assets employed in the firms operations. II.86. top management compensation is based on its return on <Answer> assets employed. (1 mark) 45. Labor cost is Rs. Fixed manufacturing overhead applicable to production is Rs. (1 mark) Page 9 of 30 . (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (II) and (III) above (e) All (I).In Almey Co.000 January 2009 8.750 respectively (e) 10.750 respectively (b) 11.10.30 per toy and variable overhead cost is Rs.000 respectively.000 units and Rs.10 per toy.000 Each toy requires direct materials from a supplier at Rs.200 units and Rs.10. Market orientation ensures a greater chance of new product success and customer satisfaction.15 per toy.Alpha Ltd. Market orientation can be imitated easily due to its tangible nature.A person who scores high on idealism and low on relativism is a(an) <Answer> (a) Exceptionist (b) Situationist (c) Absolutist (d) Subjectivist (e) Optimist.88.23.000 March 2009 8.88. 8..800 May 2009 9. (II) and (III) above..775 units and Rs. This type of scenario occurs due to (a) Inaccessibility of information to shareholders (b) Consequence of the statement (c) Complexity of the statement (d) Conflict of interest between the management and user (e) Authenticity of statement. The production budget for the month of February 2009 and the production cost budget for the month of March 2009 will be (a) 11. (2marks) 44. chemical manufacturing unit.000 per month.42. It is the practice of the company to manufacture an output in a month.000 units and Rs.23.Which of the following is/are true about market orientation? <Answer> I.35 for moving parts. Market orientation requires investment in terms of time and money.775 units and Rs. manufactures a toy baby with moving parts and a built-in voice box.500 April 2009 8. The projected sales for <Answer> 6 months are as follows: Month & Year Projected sales in units December 2008 8. III.54. Voice boxes are purchased from another supplier at Rs. which is equivalent to 75% of the current month’s estimated sales and 50% of the following month’s estimated sales.000 respectively (c) 11.

(a) Both (I) and (II) above (b) Both (II) and (IV) above (c) Both (III) and (IV) above (d) (I). In functional specialization the job is broken down into several parts which are useful in overcoming restrictions of time and knowledge in performing complex jobs. II. II. Identify the performance indicators. (II) and (III) above (e) All (I). (1 mark) 49. One of the ways of achieving specialization is functional specialization. Sales budget. (1 mark) 50. control systems usually consist of explicit rules and procedures which help establish certain standard actions and results.Entropia Ltd. As the job performed by individual employees is of a routine nature in organizations with a low degree of specialization. I. Which of the following are included in financial budget? I. Cash budget. evaluating standard performance against these set performance and implementing corrective actions to accomplish organizational objectives. III. Production budget. introduced a fast food service with an assurance of delivering the order within the <Answer> prescribed time of 30 minutes to the customers door step. (II). (1 mark) 47. Which of the following <Answer> is/are true about degree of specialization? I. (1 mark) Page 10 of 30 .. III. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (I) and (III) above (e) Both (II) and (III) above. (1 mark) 48. Financial budget is one of the <Answer> components of master budget. the traditional concept of ‘control’ does not refer to <Answer> I.Master budgets form the basis of the control systems in organizations.Specialization is one among the structural dimensions of organizational design. IV.46. Outcome indicator. Capital budget.According to Albrecht. III. incase there is a delay in delivering the order. the second component of the fraud involves <Answer> (a) Conversion (b) Theft act (c) Concealment (d) Deterrence (e) Detection. The activities of establishing set performance. evaluating actual performance against these standards and implementing corrective actions to accomplish organizational objectives. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (I) and (II) above (e) Both (II) and (III) above. Time perspective. The activities of establishing actual performance. The activities of establishing standards for performance. Performance driver.In the management context. (III) and (IV) above. (II) and (III) above. III. evaluating set performance against these actual and implementing corrective actions to accomplish organizational objectives. (a) Only (I) above (b) Only (III) above (c) Both (I) and (II) above (d) Both (II) and (III) above (e) All (I). II. II.

III. is Rs. Which of the following is an example <Answer> of key result indicators that are relevant for many organizations? (a) Return on capital employed (b) Service coverage ratio (c) Current ratio (d) Assets turnover (e) Inventory ratio.30. III.60. there is a scope for different ways of thinking and a participative style of management. (III) and (IV) above (e) All (I). Ethics training for employees.000 (c) Rs. II. In hybrid structure. Quantitative information is one important aspect that is considered in annual reports. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (I) and (III) above (e) Both (II) and (III) above. (1 mark) 55.The total purchases of Paragon Ltd. The funds flow statement. System of whistleblowing. (a) Both (I) and (III) above (b) Both (II) and (IV) above (c) (I). (1 mark) 54.000 (e) Rs. Which of the following are generally included in quantitative information? I.000 (b) Rs. one of the types of organizational <Answer> structure? I. (II) and (III) above (d) (II).50. Which of the <Answer> following ethical control mechanism(s) is/are used by an organization to regulate activity of ‘indicating and communicating objectives’? I. III.10. Code of ethics. (II). the cost of goods sold will be (a) Rs.000. Corporate governance focused on ethics.51. (III) and (IV) above. (1 mark) 53.000.000 (d) Rs.Which of the following is/are not true about hybrid structure. (2marks) 52. The cash flow statement. Hybrid organizations aim at functioning effectively by fitting the organization design to the demands of the environment.40.70. IV.A Corporate Annual Report (CAR) is a key public document prepared by organizations mainly to fulfill <Answer> the mandatory corporate reporting requirements. A combination of functional and divisional structures and matrix and horizontal structures are the two types of hybrid structures. The income statement. The balance sheet. II. If the closing stock is more than the opening stock by <Answer> Rs. IV.000.50. II. (a) Only (II) above (b) Both (I) and (III) above (c) Both (II) and (IV) above (d) (I).The management control system of any organization can be divided into various parts. (1 mark) Page 11 of 30 . (II) and (IV) above (e) All (I).. (II). (III) and (IV) above.Key result indicators emerge from the organization’s activities.

3.1.The following data has been furnished by Winci Ltd. This <Answer> approach comprises I. (1 mark) 60.12.25.222 (d) – Rs. one of the types of social audit? (a) It aims to appraise a program which has already been initiated by the organization (b) It evaluates the contribution of the organization to the well being of the local community (c) It can assume the form of a research based appraisal that is conducted to find out the social impact of pollution caused by an organization (d) It is conducted to assess social costs in terms of money (e) This audit is limited to specific processes and programs of an organization that may have social implications. for the year 2007-08 is (a) – Rs. for the year 2007-08 pertaining to its products: <Answer> Estimated market size 7. (1 mark) 59.The aim of conducting a social audit is to influence the policies. (1 mark) Page 12 of 30 .The monetary value of ending inventory is required for calculating the <Answer> (a) Direct labor (b) Cost of goods sold (c) Sales (d) Production (e) Factory overhead. (III) and (IV) above. Strategies. IV.00. II. III. (III) and (IV) above (e) All (I). Stakeholder satisfaction and contribution.One of the important approaches to performance analysis is the performance prism approach.Which of the following control principle suggests that managers should be informed about a <Answer> problematic situation only when the data shows a significant deviation from the established standards and when a situation arises that is difficult for subordinates to handle? (a) Management by control (b) Management by walking around (c) Management by objectives (d) Management by exception (e) Bottom-up management.2..28 The market size variance for Winci Ltd.18.281 (b) – Rs. (1 mark) 57. (1 mark) 58.022.000 units Actual market size 5.2. 3. (II) and (III) above (d) (II). objectives and actions of the concerned <Answer> organization to improve its social performance..4. (II).34.000 units Planned market share 29% Standard margin per unit Rs.245 (c) Rs. Processes. Capabilities. (a) Both (I) and (III) above (b) Both (II) and (IV) above (c) (I).14.56.020 (e) Rs. Which of the following is true about macro-micro social indicator audit.28.

Divisions in an organization are not allowed to buy the goods from outside sources because of the <Answer> internal constraints. (1 mark) 63. ZBB helps in integrating the planning and budgeting control processes. satisfying and retaining profitable customers/consumers in chosen target segments. so that <Answer> areas that are inefficient and of little value are identified. manufacturer of DVD players. which of the following methods of transfer pricing is implemented? (a) Negotiated pricing (b) Resale price (c) Cost-based pricing (d) Market-based pricing (e) Profit split. ZBB helps in curbing redundant expenditure. (1 mark) 65. The above situation elucidates which of the following types of controls? (a) Behavioral restriction (b) Formal controls (c) Action accountability (d) Pre-action appraisals (e) Informal controls. (1 mark) 62. In such situation. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (II) and (III) above (e) All (I). Which of the following is not the factor that influences the customer’s perception of the value delivered by an organization’s product or service? (a) Quality (b) Employee skills (c) Performance and service (d) Cost (e) Time. to administer the transfer price mechanism and to <Answer> resolve conflicts in an organization both the parties submit a written case to the arbitrator.Which of the following controls incurs lower monetary costs and usually does not result in harmful side <Answer> effects or negative attitudes? (a) Action (b) Result (c) Personnel/cultural (d) Tight (e) Loose. need to take the approval of the <Answer> vice president of Marketing. (1 mark) Page 13 of 30 .61..Customer perspective of the Balanced Scorecard performance measurement framework is concerned <Answer> with attracting. (II) and (III) above. (1 mark) 64. the contributions which are intangible in nature are evaluated and ranked. III. In ZBB. The other advantage(s) of the ZBB is/are I. (1 mark) 66.Zero-based Budgeting (ZBB) is designed to evaluate the whole spectrum of functional activity.In which of the following system of arbitration. II. who reviews it and decides on the price? (a) Voluntary (b) Informal (c) Formal (d) Compulsory (e) Official. before launching a new television commercial to replace an existing one.The brand manager for Arvinda Co. even though outside capacity exists.

Personnel/cultural controls. (1 mark) 72. III.Which of the following audit is an independent appraisal function established within an organization to <Answer> examine and evaluate its activities as a service to the organization and it need not be limited to books of accounts and related records? (a) Environmental (b) Management (c) Operational (d) Internal (e) Financial statement.40.16 Rs.000 Actual number of units sold 35.00.18 Rs. Results controls. (1 mark) 71.00.67. (1 mark) 68.90.Who among the following is responsible for issuing the guidelines for budget preparation and for <Answer> making sure that this information is properly communicated throughout the organization? (a) Chief executive officer of the company (b) Company secretary (c) Chief financial officer of the company (d) Budget controller of the company (e) Director of the company.00. (2marks) 69.15.000 (e) Rs. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (I) and (III) above (e) Both (II) and (III) above.000 (b) Rs. Related diversified firms depend <Answer> more on (a) Dynamic controls (b) Financial controls (c) Strategic controls (d) Feedforward controls (e) Feedback controls.15 Actual selling price per unit Rs. 6 The total sales mix variance was (a) Rs.00.11.14.Which of the following is also known as statement of financial position? <Answer> (a) Cash flow statement (b) Trial balance (c) Income statement (d) Funds flow statement (e) Balance sheet.40.000 Standard selling price per unit Rs.Multi-domestic strategy and international strategy are among the strategies suggested for doing <Answer> international business.000 35. 8 Rs.13. (1 mark) Page 14 of 30 .000.Management controls differ depending on the type of diversification.20.00.000 (c) Rs. detergent brands of India Limited. Which of the following controls is/are more appropriate for these strategies? I.Costing details of the Herbal and Health.000 45.12 Standard margin per unit Rs. (1 mark) 70. II.18.000 (d) Rs. for 2008 are as follows: <Answer> Particulars Herbal Health Planned sales units 30. Action controls.

Max Ltd. Which of the following is true regarding <Answer> detection risk? (a) The auditors can control the level of detection risk by properly planning. (2marks) 77. the penetration.500 (Favorable) (b) Rs.000 units Actual market size 84.. sales.In which of the following stages of product life cycle.00.500 (Adverse) (d) Rs.Detection risk is one of the components of audit risk. II. III. market share. awareness. are very low? (a) Introductory (b) Growth (c) Maturity (d) Decline (e) Saturation.000 units Actual sales 14. In order to overcome the pricing problem. The selling unit is credited with the market sales price and the buying unit is charged for the total standard costs. 32. which of the following alternative way(s) of calculating transfer price is adopted? I. (1 mark) 74. <Answer> etc.000 units Planned sales 16. (1 mark) 76. directing etc.500 (Adverse) (c) Rs.1. (1 mark) 75.000 (Favorable). (b) These risks arise due to various factors that affect the entity’s operations (c) Assessment of detection risk will involve considering the reliability of both the management and the application controls (d) Detection risk is not influenced by the audit procedures used by the auditors (e) Detection risk is the risk that a material misstatement could occur in an assertion for an account balance or class of transactions. Transfer price comprises a standard variable cost plus a share of actual profits on sales. 52. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (I) and (II) above (e) Both (II) and (III) above.Transfer pricing problem is encountered by vertically integrated organizations in industries where the <Answer> raw material is extracted and processed further to produce the final product. 52. The organizations transfer the goods and services between their profit centers at a price equal to the prevailing open market price for those goods and services.73.Which of the following is classified as an efficiency ratio? <Answer> (a) Total assets turnover ratio (b) Fixed charges coverage ratio (c) Debt-equity ratio (d) Price-earnings ratio (e) Debt service coverage ratio.700 units Standard margin per unit Rs. and would not be prevented or detected on a timely basis by the internal control policies and procedures. has provided the following information pertaining to its sales for the month of December <Answer> 2008: Estimated market size 80. 32..25 The variance due to market share for the period was (a) Rs. (1 mark) Page 15 of 30 .500 (Favorable) (e) Rs.

Limra Ltd.. (1 mark) 82. (a) Both (I) and (II) above (b) Both (II) and (IV) above (c) Both (III) and (IV) above (d) (I). are a few boundary systems. budgeting. is a company with two main business units . (1 mark) Page 16 of 30 .Feedforward control is a(an) <Answer> (a) Follow-up control (b) Follow-back control (c) Assumed control (d) Reverse control (e) Anticipatory control.000 Variable costs 800 Traceable fixed costs 40 Segment margin of furnishing division of Limra Ltd.100 lakhs (e) Rs. in lakhs Sales 1. These systems are based on the principle that in an age of empowered employees.Which of the following is defined as ‘resources and effort toward activities that cannot be justified <Answer> easily in terms of their immediate contribution to organizational objectives’? (a) Kickback (b) Whistleblowing (c) Slack (d) Corporate counsel (e) Moral judgment. brand management etc. for the year 2007-08 is (a) Rs. (1 mark) 80.200 lakhs.an equipment division and a furnishing <Answer> division. it is easier and more effective to set the rules regarding what is inappropriate rather than what is appropriate. Performance management. (1 mark) 79. if the industry is stable and the <Answer> main challenge is to maintain or improve operational efficiencies. (III) and (IV) above. IV.. These systems use quantitative data. which the top management can monitor due to its focus on cost efficiencies? (a) Rigid/cost conscious (b) Flexible/inefficient (c) Flexible/cost conscious (d) Rigid/inefficient (e) Rigid/efficient. (II) and (III) above (e) (II).78. Which of the following are false regarding boundary systems. These systems are used to communicate the doctrines of the corporate culture to every employee of the organization.400 lakhs (b) Rs. II.160 lakhs (d) Rs. (1 mark) 81..Which of the following strategic business profile will be best suited. III. The following data is available for furnishing division for the year 2007-08: Particulars Rs. statistical analyses and variance analyses to scan for anything unusual that might indicate a potential problem.The concept of ‘levers of control’ proposed by Robert Simons help managers not only in motivating <Answer> people to be creative but also in enforcing the control systems of the organization effectively.300 lakhs (c) Rs. one of the levers of control used in management? I.

.A debt-asset ratio of 0. has furnished the following details for the year 2007-08: <Answer> Particulars Rs.190 lakhs.20 (c) 0.For Snable Ltd. Cost of <Answer> capital is 35% and tax rate is 40%.12 (e) 0.90 lakhs.83 of a firm implies <Answer> (a) 83% of debt is yet to be repaid from the assets (b) 83% of total assets are financed from debt sources (c) 83% of the current assets are financed from debt (d) 83% of the debt is already repaid from the assets (e) 83% of the debt is used for financing fixed assets. (2marks) 88.18.2.30 (b) 0.83.. (1 mark) 84. Profit before Interest and Taxes (PBIT) is Rs.0 (d) + 04. (1 mark) END OF QUESTION PAPER Page 17 of 30 .. (1 mark) 85.8 (b) − 12. is (a) + 03.A gross profit margin ratio does not indicate <Answer> (a) The earning power (b) The efficiency of production (c) The efficiency of pricing (d) The gap between net sales and cost of goods sold (e) The balance left to meet the administration and financial expenses. 000’s Net Worth 900 Preference Share Capital 150 Preference Share dividend 11 Net Profit after Taxes 110 Interest 26 The Return on Net Worth (RNOW) for the given data is (a) 0.3 (e) + 09.80 (d) 0. (2marks) 86. had they invested their money elsewhere? (a) Cost of capital (b) Opportunity cost (c) Economic value added (d) Market value added (e) Brand value added.Lumbini Ltd. Capital is Rs.5 (c) − 08. The Economic Value Added (EVA) for Snable Ltd.Which of the following is not a current liability? <Answer> (a) Acceptances or Bills payable (b) Sundry creditors (c) Interest accrued and due on secured loans (d) Amounts due to subsidiary companies (e) Declared dividends. (1 mark) 87.Which of the following is an estimate of the amount by which the earnings of the company exceed or <Answer> fall short of the return that shareholders and lenders could have got.

74.5. B Auditor of the company decides whether the financial statements audited are depicting the true < and fair picture of the organizations state of affairs.16. if it wants to compare its market share with < that its competitors.5. advertising. C Working capital refers to current assets minus current liabilities. Hence the answer is (b).000) = Rs. B The critical success factors in case of consumer electronics industry such as Whirlpool would < be sustainable customer relationship with distributors and cutting edge research and development. is an example of Appropriation budget.09. sales promotion < and R&D etc.20 + 82. 3. visionary leadership etc.000)} = (3. < Tata Group implemented the ‘Tata Business Excellence Model (TBEM)’ to bring about a transformation in the organization to enable it to face the dynamic and competitive business environment. 2nd quarter cash payments = {75% × (5.5. < Hence the answer is (a).I (MB2F3): January 2009 Answer Reason 1. 8. customer-driven excellence. valuing employees and partners. 4.100 + 1. Hence the answer is (e) 4. B Total planned overhead costs for the 1st quarter = (69..20 + 82.000) = Rs.40.000 × 6. 6.800 – 42. A The structural dimensions are shaped based on the Contextual dimensions. Suggested Answers Management Control and Information Systems . Hence the answer is (d). 7.42.000 × 6. Hence the answer is (b) Page 18 of 30 .800 - Rs.800 < Total planned overhead costs for the 2nd quarter = (74. 5. TBEM includes core values like organizational agility. the value of current assets decreases and thereby decreases the value of working capital.050.000} + {25% × (Rs. 2.91. Hence the answer is (b).950) = Rs. If stock is sold at 20% below < cost for cash. E Statement (III): Company-driven excellence is not the core value in TBEM. D A budget for certain discretionary expenditures such as training. Hence the answer is (c).09.800.40. B Pie chart is more convenient for Reliance telecom.

Hence the answer is (d). E Non-operational causes lead to cost variance for materials. B Statement (I) and (IV) are true about compliance management audit: <  Auditors are asked to identify the gaps between the organization’s existing policies and objectives and its actual practices. Statement (IV): Both the teams and the individuals in an organization are held responsible for the key performance indicators. cash payment of direct material purchases. < Hence the answer is (d). 11. Hence the answer is (b). if the cost of materials is recorded < wrongly or it is recorded higher or lower than the correct or budgeted value. 12.9. D The direct material budget constitutes calculation of five different heads: Quantity of material < needed in production. D Divisional structure is also termed as Product structure. C Information regarding assets is considered to be ‘Essential’ information item in an annual < report. This type of audit eliminates the fear of directives being imposed on the organization by an outside party. C The characteristics of key performance indicators are: < Statement (II): They should be devised in such way that employees at all levels in the organization understand and utilize them effectively. budgeted cost of material purchases. 10. 14. 15. Hence the answer is (e). < Hence the answer is (a). A Locus of control relates to the reasons which a person cites for his/her success or failure. Page 19 of 30 . C Standards constitute the foundation of the cybernetic process of management control. 13. 16. quantity of material to be purchased. cost of material used. < Hence the answer is (c). Hence the answer is (c). Hence the answer is (c).

10.000 ÷ 24. when achieved. < Hence the answer is (a).04 – Rs. The planning activity in master budgets helps organizations to look for alternative ways in which they can enhance value to customers and also minimize costs. Hence the answer is (d). E Public relation department forms an example of the cost center where the cost budget is < specified first.000 units = Rs. Hence the answer is (c).11.50) = Rs. 18. Hence the answer is (c). Hence the answer is (b). Page 20 of 30 .800 (Favorable). Statement (III) : Compliance. 2. Using < technique such as what-if analysis help in controlling the inherent risk in decision-making in such scenario. certification. 21.11. the implementation and day-to-day management are taken care of by the finance and tax departments. 24.800 ÷ 20. B The sales price variance is determined by multiplying the difference between actual price and < budgeted price by actual units. Hence the answer is (e). A master budget helps the employees track how each of their business unit objectives. C The audit categories differ in terms of < Statement (I) : Their emphasis on financial data and/or non-financial data. 23. contribute to the objectives of the organization. Actual price per unit = Rs. 22.17.000 units (Rs. C The following are the benefits of master budget: <  As the master budget is a compilation of the budgets from different departments.20. C Strategic decisions-making may involve a lot of uncertain and fuzzy variables. E Productivity and quality are the important aspects in operations management.52.04 Budgeted price per unit = Rs. A Closed loop controls are the classification based on time of implementation of controls. 2.10. it helps in better integration of all the organizational functions. 19. in terms of providing for greater lead times and accepting relatively poor quality.000 units = Rs.50  Sales price variance is 20. Bad quality can < lead to managers budgeting for slack in their operations. Statement (IV) : Scope. D In certain organizations. the transfer pricing department only draws up the transfer pricing < policies. 20. Hence the answer is (c).10. Hence the answer is (e). communication and/or control.

in India is same as the current market price-as if the transaction is taking place between two unrelated organizations. Page 21 of 30 . 26. In this strategy. in China. B Book-keeping monitors the organization’s financial activities and maintains documentary < evidence of all inflows and outflows. 31. D In Flat line target of period-to-period reporting. E The following statements are true about budgeting: <  Budgets help in integrating the tactical and operational strategies of different departments with the corporate strategy of the organization.. Hence the answer is (d). < Hence the answer is (e). the performance parameter is expected to < exhibit a linear pattern throughout the period during which the performance is analyzed. A Dustin Ltd. 29. Budgets can be used to evaluate the performance of the operations of the organization as well as the performance of the employees against set standards. Hence the answer is (e). then the method of estimating transfer pricing is known as Comparable uncontrolled price method. Hence the answer is (b). Budgeting helps managers to enhance their learning skills. If the rate < charged by Dustin Ltd. independent < thinking. D Multi-domestic strategy involves adapting to local requirements by customizing both product < and marketing strategy. assertiveness etc. 30. there is usually a poor flow of know-how between the parent organization and the subsidiary. Hence the answer is (a). Hence the answer is (d).25. E For the audit evidence to be useful it has to fulfill criteria like sufficiency and appropriateness. Hence the answer is (b). 27. in India sells wool to its subsidiary organization Diakiba Ltd. The budgeting process starts with the dissemination of guidelines approved by the senior management. B Masculinity is one of the dimensions of culture which implies competitive spirit... 28.

37. 36. < Hence the answer is (b). Hence the answer is (a).60 (4. Alok Nath is an autocratic directive manager. A Audit risk = inherent risk × control risk × detection risk. A Statement (II): An analysis of the cash flows from operating activities will indicate the < quantum of cash being generated from business operations is true about cash flow statement. 33.900 units) = Rs. E Standard costs are used in the cost-based pricing methods. Hence the answer is (a) 35. 38. 34. Hence the answer is (b).60  (-400) units = Rs.32. Hence the answer is (d). A Rolling budgets help organizations to control inaccuracies regarding projections and in turn < minimize the discrepancies between the standards and the actuals. A Intuitive controls is used when the objectives are clear and results quantifiable but the < interfaces are not predictable and activities not repetitive. < = 50% × 82% × 48% = 19. Hence the answer is (a) Page 22 of 30 .500 units −4.68%.000 (Adverse). D Sales volume variance = ∑[(Standard margin per unit)× (Actual sales − Planned sales)] < = Rs. B Mr. B Government rules and regulations is not the factor which can be controlled by the < organization. Since the audit risk is exceeding the acceptable level of risk by the auditor he will increase the probability of detecting the misstatement and decrease the detection risk. Hence the answer is (a). 24. < Hence the answer is (e) 39.

000 Closing stock at the end of March must be 10% higher than opening stock = Rs.000 = Rs.7.5  Rs. 43.90 + Rs.050  0.750 + Rs.8.27.60.000 = (6.7.550 units.35 + Rs.50 < = 6.15 + Rs. Page 23 of 30 . This type of scenario occurs due to conflict of interest between the management and user. D If top management compensation is based on firm return on asset employed.20.200 = Rs.10) + Rs.320 Purchases in the month of April 2009 = Closing stock + Raw materials used in production – opening stock = Rs.500 = 4.20 000 Closing stock at the end of February must be 10% higher than opening stock = Rs.320 + Rs. Hence the answer is (d).000 kg  Rs.050 units Raw materials: Opening stock of raw material at the beginning of February = 60.320 + (4.83.000  110% = Rs.420.30 + Rs.71.250 units = 11.000 = 10. 42. The production cost budget for March 2009 = (8.71.500  110% = 66.54.58. Interest coverage ratio = Profit before interest and taxes / Interest expense. Hence the answer is (d). 41.000 units. D The following are true about market orientation: <  Market orientation requires investment in terms of time and money.550 + 4.750 units + 4.) Closing stock at the end of March must be 10% higher than at the beginning of the month: 55.54.775 units × Rs.375 + 4. 44. Hence the answer is (b). (Closing stock for February is the same as opening stock for March.8. A The production budget for February 2009 = 9. Production in the month of April 2009 = Closing stock + Sales . D Interest coverage ratio measures the firm’s ability to handle financial burdens.66.5) × (Rs.75 + 8.92.200 = Rs.69.000 = Rs.7.23.400) × Rs.000 units. Market orientation ensures a greater chance of new product success and customer satisfaction.12) – Rs.90 + Rs.96.000  110% = Rs.200  110% = Rs.500 × 0.Opening stock = 66.750.500 × 0.000  110% = 60.58.12 = Rs.28.9. Hence the answer is (a).000  110% = 55.71.000 – 60.75 + 8.58. Shareholders of < the firm suspect that the management projects the inflated picture of the profits and underestimate the value of assets employed in the firms operations. Hence interest coverage ratio of 6 indicates Profit before interest and taxes is 6 times of interest expense. Hence the answer is (d).54.9.66.500 units.54.8.40.9.92.800 × 0. This ratio tells < how many times the firm can cover or meet the interest payment associated with debt.71.8.000 units × 0. Closing stock at the end of April must be 10% higher than at the beginning of the month: 60. 10.300 – Rs.9. B Finished goods: < Closing stock at the end of February must be 10% higher than at the beginning of the month: 50.200 Closing stock at the end of April be 10% higher than opening stock: = Rs.7.

46. Hence the answer is (d). A The financial budget includes capital budget. Hence the answer is (c). 51.10.000 – (Rs. Page 24 of 30 . C According to Albrecht. < Hence the answer is (a). C The following statements are true about degree of specialization: < Statement (I): One of the ways of achieving specialization is functional specialization. evaluating actual performance against these standards and implementing corrective actions to accomplish organizational objectives. Hence the answer is (b) 49.000 Since. late delivery of food. C Quantitative information includes the balance sheet. the second component of the fraud involves ‘concealment’ which < involves the steps taken by the perpetrators to hide the fraud from others.50.45. cash budget and the budgeted balance sheet.40. 52. Hence the answer is (c). 10. C A person who scores high on idealism and low on relativism is an absolutist. consider the performance indicator. 50.000)* = Rs. 47. the traditional concept of ‘control’ refers to the activities of < establishing standards of performance.000.. Hence the answer is (c) 48. This < may be considered as an outcome (lag) indicator (focus is on late) as well as a performance driver (lead) indicator (focus is on delivery). the cash flow statement and the income < statement. C Cost of goods sold = Purchases + Opening stock – Closing stock < = Purchases – (Closing stock – Opening stock) = Rs. Hence the answer is (c). example. Statement (II): In functional specialization the job is broken down into several parts which are useful in overcoming restrictions of time and knowledge in performing complex jobs. the closing stock has been increased by Rs. B In the management context. < Hence the answer (c). D In the Entropia Ltd.

57. 59. Hence the answer is (d).Estimated market size)  Rs. strategies. Hence the answer is (d). < capabilities and the stakeholder contribution.3. 54. A Return on capital employed and profitability are two examples of key result indicators that are < relevant for many organizations. E Performance prism approach comprises stakeholder satisfaction.14. Hence the answer is (b). It evaluates the contribution of the organization to the well being of the local community. 00. B The monetary value of ending inventory is required for calculating the Cost of goods sold. Page 25 of 30 . B Macro-micro social indicator audit is conducted to evaluate an organization’s social < performance. Hence the answer is (d). < Hence the answer is (b). D Market size variance = < (standard margin per unit )×  ( Planned market share %)×( Actualmarket size . 56. D The following ethical control mechanisms are used by an organization to regulate activity of < ‘indicating and communicating objectives’:  Code of ethics. processes. 2. 020 . 000  7. 55.28  29%  (5. Hence the answer is (a). 25. Ethics training for employees. 60. Hence the answer is (b). 58.53. Corporate governance focused on ethics. Hence the answer is (e). 000)   Rs. D Management by exception suggests that managers should be informed about a problematic < situation only when the data shows a significant deviation from the established standards and when a situation arises that is difficult for subordinate to handle. B Statement (II): A combination of functional and divisional structures and matrix and < horizontal structures are the two types of hybrid structure is not true.

Hence the answer is (c). ZBB helps in curbing redundant expenditure. performance and service and cost are the factors that influence the customer’s < perception of the value delivered by an organization’s product and service. Hence the answer is (d). 64. 62. B Quality. 63. C Cost-based pricing method is implemented in case of an organization makes a significant < investment in facilities: then. time. it will not buy the goods from outside sources even though outside capacity exists because of the internal constraints 67. C Personnel/cultural controls incur lower monetary costs and usually does not result in harmful < side effects or negative attitudes. C In formal system of arbitration to administer the transfer price mechanism and to resolve < conflicts in an organization both the parties submit a written case to the arbitrator. D Pre-action appraisal involves a supervisor reviewing a subordinate’s plan of action. Page 26 of 30 .61. 66. D Internal audit is an independent appraisal function established within an organization to < examine and evaluate its activities as a service to the organization and it need not be limited to books of accounts and related records. Brand < manager taking approval of the vice president. 65. Hence the answer is (d). who reviews it and decides on the price. Hence the answer is (d). Hence the answer is (b). D Following are the advantages of ZBB: <  ZBB helps in integrating the planning and budgeting control processes. Hence the answer is (c).Marketing before launching a new television commercial to replace an existing on elucidates pre-action appraisals control.

000 units. E Balance sheet is also known as statement of financial position. C Results controls is more appropriate for multi-domestic and international strategies. (8.000 – 42. 69. 00. D Budget controller of the company is responsible for issuing the guidelines for budget < preparation and for making sure that this information is properly communicated throughout the organization. 000  = 75. 00. Page 27 of 30 .000. (6-6.12 Rs.000 70.000 Standard selling price per unit Rs.60.000) = Rs. 000 = 28.000 35.8) × (35.00. 000 = Rs.00. Total actual sales Planned Sales  Actual sales of Health at standard sales mix = Total planned sales 70.000 Actual number of units sold 35.000 – 28.40. 00.8 Total actual sales Planned Sales  Actual sales of Herbal at standard sales mix = Total planned sales 70.28 Standard margin per unit Rs.8) × (35.00. 14. 70.00. 8.00. Hence the answer is (c).00.16 Rs. < Hence the answer is (c).18 Rs. < Hence the answer is (c).000) = Rs. 000 30.6.000 Total sales mix variance = Rs. 33 Actual selling price per unit Rs. 72. Standard average margin per unit = = 75. 000 45.000 Sales mix variance for Health = Rs.68.6 5.000 75. 000 = 42. 5.000 units Sales mix variance for Herbal = Rs.15 Rs.00. C [(Standard margin per unit -Standard avearge margin per unit)] × <  (Actualsales -Actual salesat standard sales mix)] Particulars Herbal Health Total Planned sales units 30. 000  = 75. 71.00.000 45.40.00.60.6. 00. 00. (8. 000 Rs.00. 00. 00. 00. < Hence the answer is (e). C Related diversified firms depend more on Strategic controls. Hence the answer is (d).00.8 Rs.00.10.000) = Rs.00.000 + 5.

000 × (17.5% = Rs. 000 Planned number of units sold Planned market share %  Estimated market size 16. Hence the answer is (a). = Rs. 75. market share. Page 28 of 30 .73. 25 × 84. A In introductory stage of the product life cycle. 52. C Slack is defined as ‘resources and effort toward activities that cannot be justified easily in < terms of their immediate contribution to organizational objectives.500 (Adverse). In order to overcome the pricing problem the following methods can be used: Profit sharing or Profit split method: A method where transfer price comprises a standard variable cost plus a share of actual profits on sales. awareness.50% = 84.000 × 2. 000  100  20% = 80. D Transfer pricing problem is encountered by vertically integrated organizations in industries < where the raw material is extracted and processed further to produce the final product.5% -20%). 000 Market share variance = Rs. < etc. 25 × 84. are very low. sales. correctly carrying out the procedures and assessing the results. B Market share variance = < [(Standard margin per unit)×(Actualmarket size)×(Actualmarket share%-Plannedmarket share%) Actual number ofunits sold Actual market share %   100 Actual market size 14. 74. It measures the efficiency of the firm’s activities and its ability to generate profits. Hence the answer is (d). supervising < and reviewing the procedures used. 76. Hence the answer is (a). Hence the answer is (c). A Total assets turnover ratio highlights the amount of assets that the firm used to generate its < total sales. Two sets of pricing method: A method where the selling unit is credited with the market sales price and the buying unit is charged for the total standard costs.. directing. Hence the answer is (a). 77. the penetration. Hence the answer is (b). 78. It is also known as turnover ratio. 700  100  17. appropriately deciding the nature and timing of audit procedures. A The auditors can control the level of detection risk by properly planning.

84.5 EVA = −12.79. 81. Capital = Rs. are a few boundary systems. C Economic value added is an estimate of the amount by which the earnings of the company < exceed or fall short of the return that shareholders and lenders could have got had they invested their money elsewhere. Statement (II): These systems are used to communicate the doctrines of the corporate culture to every employee of the organization. 54 lakhs. C Interest accrued but due on secured loan should be included along with the loan to which it < relates is not current liability. 90 lakhs (1− 0. 190 lakhs. < 85. B NOPAT = PBIT (1− Tax rate) = Rs. which the top management can monitor due to its focus on cost efficiencies.4) = Rs. Cost of capital = 35%. budgeting. in lakhs Sales 1.000 Variable costs 800 Contribution margin(Sales. E Rigid/efficient profile will be best suited if the industry is stable and the main challenge is to < maintain or improve operational efficiencies. statistical analyses and variance analyses to scan for anything unusual that might indicate a potential problem. Economic Value Added (EVA) = NOPAT− (Capital × Cost of capital) = Rs. E Feedforward control is an anticipatory control. D The following are false regarding boundary systems: < Statement (I): These systems use quantitative data. 83. 54 lakhs – 66. Statement (III): Performance management..5 Hence the answer is (b). < Hence the answer is (e). Page 29 of 30 . C < Particulars Rs. 190 lakhs × 35%) = Rs. 80. Hence the answer is (c). 82. 54 lakhs – (Rs. Hence the answer is (e).variable costs) 200 (Less) Traceable fixed cost 40 Segment margin (Contribution margin. 160 Traceable fixed cost) Hence the answer is (c). Hence the answer is (c). brand management etc. Hence the answer is (d).

< Hence the answer is (b). A Gross profit margin = Gross profit/Net sales < This shows the profit relative to sales after the direct production cost are deducted. < TOP OF THE DOCUMENT > Page 30 of 30 . The gross profit is used to meet administrative and financial expenses. 87. 88. < Net Pr ofit 110 D  0.86. Hence the answer is (a). B A debt-asset ratio of 0. It may be used as an indicator of the efficiency of the production operation and the relation between production costs and selling prices.83 implies that 83% of the total assets are financed from debt sources.12 Return on Net Worth (RNOW) = NetWorth = 900 Hence the answer is (d).